Offensive to sellers but have people gone over the cliff on Car values

OK, this might be a tad off topic, but I'll let others decide that. Yesterday I went to look at a '79 Thunderbird, not because I really want it, though I did own something very similar in the late '80s, but because my buddy asked me to check it out as it belongs to one of his staff. The car was a project that this young man's father had taken on, but most unfortunately the gentleman passed away last year, leaving the T bird unfinished, and the son is not interested in it, but has no idea what it may be worth.
It is a fully loaded car, including the very rare T top option, either a Heritage Edition or Diamond Jubilee model. The engine is a 351 Windsor, it has been rebuilt, has had a QFT 4 bbl carb and aftermarket intake added, trans is rebuilt, body and paint are done, and appear to be a quality job, he has all of the parts to complete it, front end, brakes, etc. all been done. Basically just needs interior put in and all trim pieces re installed. He has most if not all receipts for all the work done. This was a car that this man had been doing for himself, talking with the son it was clear that it was his dream car, no expense spared, he intended to keep it for a long time, a great amount of attention to detail given to doing it right.
I estimated between 10 and 12k in receipts alone for engine rebuild, body and paint, etc. He is hoping that he can sell it for 5k, but the reality is that between the depressed economy and the very limited appeal for a car like this, I think he would do well if he sold it $3500.00. I feel that someone is going to get a great buy on this car, which is good for the buyer, but is it good for the hobby?